The Paris Club of creditor countries have agreed to restructure Somalia’s external public debt with an immediate cancellation of 1.4 billion U.S. dollars.
The agreement between Somalia and the Paris Club creditor nations was reached on Tuesday evening under the so-called “Cologne terms,” as part of an initiative to provide interim debt relief to heavily indebted poor countries (HIPC). “Several creditors intend on a bilateral basis to grant additional debt relief to Somalia beyond the terms set today in the Paris Club agreement,” the Paris Club said in a statement issued on Tuesday evening.
The Horn of African nation is expected to reach its HIPC Completion Point by March 31, 2023, or earlier and receive the remainder of the debt reduction envisioned under the enhanced HIPC Initiative.”On an exceptional basis, considering Somalia’s very limited capacity of payment, and provided that it continues to implement satisfactorily an IMF-supported program, no payments are expected from Somalia until at least 31st March 2024,” the statement said. Somali finance minister Abdirahman Beileh welcomed the debt cancellation and vowed to continue with economic reforms to help rebuild the country. “This is in recognition of our strong track record of reform and commitment to rebuilding our country. We will continue with our reforms and go forward,” said Baileh.
Representatives of Paris Club members, including Britain, Norway and the U.S., and those of the International Monetary Fund (IMF) and the World Bank expressed their commitment to implement the final component of debt relief contemplated under the enhanced HIPC Initiative as soon as Somalia meets the conditions to reach the completion.By then, according to IMF and World Bank estimates, those creditors will have delivered total debt relief of about 1.7 billion dollars.